That's a dramatic loss to the state. Cisco employees cashed
in $7.1 billion worth of stock options during the previous fiscal year, an amount
larger than the state's $6.3 billion budget surplus.

To digest the shortfall, departments across the state are
being asked to trim budgets by 15% for the 2002 fiscal year, Gibson says.

 Washington. The state that Microsoft and
Amazon call home can't measure the hit yet, because it has no state income tax
but relies on sales taxes. Still, the pain is severe, says Changmook Sohn, executive
director for the state's office of forecasting. Rising stock options gave consumers
money to spend.

Personal income this year is expected to grow by only 4%,
depressed by stock options, he says. It's a tough change. In 1999, for instance,
personal income grew by 8%  3 percentage points of which were due to just
the stock options of Microsoft.

Stock options "had been a phenomenal contributor" to the
state's income, Sohn says. Their "role has reversed now."

During Microsoft's last fiscal year ended June 30, the
value of stock options cashed in by employees dropped 63% to just $5.9 billion,
Parish says.

 Oregon. The home of more Intel employees
than any other state won't know how much tax it'll lose out on until the forecast
is released later this month, says state economist Tom Potiowsky. But a decrease
is likely, he says. And state agencies are already being asked to trim 2002
budgets by 10%, he says.

The value of stock options exercised by Intel employees
dropped 73% during the 6 months ended June 30 to $485.7 million, Parish says.

"The impact will be even more significant in the coming
quarters," he says.